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Deferred Tax (Vernon Co)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Deferred Tax (Vernon Co)

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by P2-D2.
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  • Author
    Posts
  • February 27, 2022 at 3:53 pm #649459
    thezadzzz
    Participant
    • Topics: 25
    • Replies: 17
    • ☆

    Hi,

    Extract from Vernon Co:

    (iv) “During the year, Vernon Co revalued its head office for the first time, resulting in an
    increase in value of $12m at 31 December 20X8. Deferred tax is applicable to this gain
    at 25%.”

    Why is the deferred tax charge on the revaluation gain ($12m x 25% = $3m) not deducted within “tax expense” on the P&L. It has only been deducted under OCI.

    March 3, 2022 at 7:11 pm #649753
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 7198
    • ☆☆☆☆☆

    Hi,

    This is because any tax on the increase in value matches up to where the increase in value has been posted, i.e. other comprehensive income.

    Thanks

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    Posts
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